Virginia student settles lawsuit over her mistaken arrest after water mistaken for beer

RICHMOND, Va. – A college student who says she fled in terror when undercover officers who thought she had illegally bought beer swarmed her SUV has reached a $212,500 settlement with the state of Virginia.

Attorney General Mark R. Herring announced the settlement Wednesday night with Elizabeth Daly, who had filed a $40 million federal lawsuit against agents with the state Department of Alcoholic Beverage Control. The lawsuit said Daly had bought a carton of sparkling water at a supermarket in April 2013, which the agents mistook for beer. She said that the badges around the agents' necks were not clearly visible, and that the agents did not identify themselves as officers.

The agents banged on the sport utility vehicle and demanded that she open the window and not start the engine. One tried to break the window with a flashlight, and after another officer pulled a gun, one of Daly's two passengers shouted that the badges were fake and implored the driver to "go, go, go," according to the lawsuit.

Daly was charged with eluding police and assaulting a police officer after her SUV grazed two of the agents. The arrest provoked a public outcry, and the charges were dropped.

Herring said the settlement was not an admission of wrongdoing by any of the parties in the lawsuit.

"My goal throughout this case has been to reach a resolution that is just and fair for all parties, including Ms. Daly, the ABC and its agents, and the Commonwealth and its taxpayers," Herring said. "After careful consideration of the potentially significant costs of taking this case to trial, I believe we have reached such an outcome."